Alnylam, Tekmira Look Ahead After RNAi Divorce

Xconomy Boston — 

Alnylam Pharmaceuticals and Tekmira Pharmaceuticals were married, more or less, for eight years. But now that their divorce is final, each side sounds like it is relieved to be going off in separate directions. And shareholders of the companies who watched this dispute from afar basically agreed yesterday.

After news of a legal settlement broke late Monday, shares of Cambridge, MA-based Alnylam Pharmaceuticals (NASDAQ: ALNY) climbed 5 percent to $16.94 yesterday. Tekmira (NASDAQ: TKMR) got a bigger lift, up 9 percent to $5.60.

The two companies, which began working together in 2004 when Tekmira went by the name Protiva, had been embroiled in a tense legal dispute since March 2011. That was when Tekmira accused Alnylam of what it called “relentless and egregious” misappropriation of its trade secrets. Tekmira sought $1 billion in damages related to the intellectual property, which covers lipid nanoparticles that are supposed to make it possible for RNA interference drugs to be effectively delivered inside cells. On the eve of taking this case to a jury trial, Alnylam agreed to pay Tekmira $65 million upfront to terminate a manufacturing agreement and amend a license to use the technology. Both sides agreed to drop all litigation, and amend their relationship so it’s unlikely that they’ll ever end up fighting each other in court again.

Mark Murray, CEO of Tekmira Pharmaceuticals

After the settlement was announced yesterday, each side was able to show something of value to its shareholders. Tekmira, in particular, is getting two years’ worth of extra operating cash which it can pour into its R&D programs.

“This leaves us in a great position,” says Tekmira CEO Mark Murray. “We’ve been able to recover our IP. There will be an assignment of patents back to us, control will go to us, we can license and use them as we see fit. We’ve re-established and shored up our platform, which is the gold standard in the RNAi delivery business. We now have some additional cash reserves that will allow us to push forward our product pipeline. Now we can get back to work of building our business.

John Maraganore, CEO of Alnylam Pharmaceuticals

Maraganore, the Alnylam CEO, said his company believed to the end that it did nothing wrong and that Tekmira’s accusations were “meritless.” But he said Alnylam chose not to take the risk of putting the case before a jury. “We viewed our case extremely strongly, but nobody knows when you go to a jury trial what the jury will decide. Reaching a settlement is a way to achieve certainty. It’s a smart business decision,” Maraganore says.

Each side had a lot to lose. For Murray, the decision to bring the lawsuit was a “bet-the-company decision,” he says. Tekmira had just $6.9 million in cash left at the end of June, and it only had a little more than a year’s worth of cash left in the bank. If it had walked away empty-handed, it would have been … Next Page »

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